Self-employed retirement plans Houston, TX. The freedom of owning your own business in Houston, TX offers many benefits of being self-employed. That said, this flexibility sometimes brings with a lack of security, especially when it comes to retirement savings, since you don't have the benefit of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, yet countless would be better off exploring their options. In addition to achieving a financially stable retirement, partnering with a financial advisor in Houston, TX to set up your self-employed retirement plan can provide significant tax advantages that allow your business to grow and succeed.
Few Houston, TX financial advisory and retirement planning firms are as attuned to the requirements of entrepreneurs as well as Correct Capital. The father of our founder was a small business owner himself (read more of our story here), and Correct Capital are deeply experienced in assisting business owners in their retirement planning needs. We understand that your professional and personal aspirations aren’t limited to just monetary concerns, and we work tirelessly to offer personalized solutions aligned with your vision. Continue exploring to find out about your self-employed retirement plan options in Houston, TX, or reach out to Correct Capital at 877-930-401k or contact us online to consult with a small business financial advisor in Houston, TX today.
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Why Houston, TX Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also deliver immediate benefits today. With customizable contribution options to considerable tax savings, partnering with a financial advisor in Houston, TX enables you to customize your retirement plan to fit your specific needs.
Flexibility That Fits Your Income
If your income changes over time, a plan like a SEP IRA or Solo 401(k) gives you the flexibility to adjust how much you save:
- Customizable Contributions: Set aside more during profitable years and reduce savings when income is lower, ensuring your plan fits your cash flow.
- Roth Options: A Roth Solo 401(k) lets you handle taxes upfront, allowing you to withdraw without tax penalties in the future—a wise move if you believe your tax rate to be higher in the future.
Save Money on Taxes
Retirement plans for self-employed individuals offer significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA shrink your tax liability, so you can keep more of your income.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, providing your money more time to compound.
- State-Specific Incentives: In some states, you may be eligible for additional credits as a sole proprietor. These regional incentives can make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Those who meet the requirements can claim a tax credit of up to 50% of the first $2,000 put into a retirement plan, further reducing your tax bill even more.
Protect Your Savings With Smart Investments
Planning for a safe retirement goes beyond just how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Allocating your investments across varied asset classes like stocks and bonds can help reduce risk while helping to grow your retirement fund.
- Emergency Back-Up: Supplementing your retirement savings with a business emergency fund ensures you don’t tapping into your nest egg during tough times and facing tax penalties.
Plan for the Future of Your Houston, TX Business
Retirement planning can assist you prepare for what’s next with your Houston, TX business:
- Selling Your Business: When selling your business, accounts such as SEP IRAs or Solo 401(k)s stay in your name and are not part of the sale. These plans ensure the financial stability you’ll need during retirement. Keep in mind that while the sale of a business usually creates a capital gain, deposits into these plans are restricted by contribution limits (e.g., up to $7,000 for IRAs or up to $70,000 for Solo 401(k)s, including catch-up contributions, depending on plan details).
- Minimizing Taxes: Using retirement contributions wisely helps lower the taxes you’ll owe when you sell your business.
- Succession Planning: If you’re passing the business on, your retirement savings provide financial security through the transition. You can also work with a financial advisor who specializes in succession planning and retirement accounts to minimize tax burdens associated with the transaction.
With the right retirement plan, you can take control of your financial future, reduce your tax burden, and establish a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Houston, TX Now?
There’s no denying that time is one of the most valuable factors when it comes to saving for retirement. Starting early not only allows you to build a bigger financial cushion but also lowers the financial burden of playing catch-up as you get older. This is why it makes sense to begin today:
The Cost of Waiting
Delaying your retirement savings may cause a major impact on the amount you’ll have when you reach retirement age. The biggest reason is compound interest—the financial principle where your investments grow, and those returns, subsequently, earn even more returns. The more time your money has to grow, the larger the effect of this growth.
Example: Two individuals, Alex and Taylor are both self-employed individuals. Their shared goal is to save $500,000 for retirement by age 65:
- Alex begins contributing $5,000 annually at age 30.
- Taylor waits until age 40 but contributes $7,500 annually to make up for lost time.
By age 65, using a projected 7% annual return:
- Alex invests $180,000 and accumulates $691,184.39*.
- Taylor contributes $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Even modest contributions invested steadily may result in substantial growth. Consider this example showing the impact of compound interest:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an average annual return of 7%, you’ll accumulate $497,303.29* by age 65.
- Starting at age 35: Contributing the same $200 per month yields only $235,412.97* by age 65—a difference of over $260,000, all because of a 10-year delay.
Starting sooner, the less you need to save each year to achieve your retirement goals.
*These calculations represent estimates calculated using NerdWallet’s Compound Interest Calculator, with the assumption of a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. These examples are for illustrative purposes only and are not a promise of future results. Your individual results may differ due to elements like market conditions, fees, and personal factors. Be sure to speak with a financial advisor for personalized advice.
Take Control of Your Financial Future
As a self-employed person in Houston, TX, it can be tempting to put more emphasis on reinvesting in your business rather than saving for retirement. However, beginning a plan now enables you to:
- Leverage tax-free future growth or penalty-free withdrawals later on.
- Benefit from adjustable savings that adapt to your earnings.
- Build a long-term safety measure that provides security, no matter how your business changes.
The sooner you start, the less you’ll be required to worry about making up for lost time later in life. Saving for retirement now means gaining control over your financial future and creating for yourself the ability to concentrate on your dreams—both for your retirement years and your Houston, TX business.
Types of Self-Employed Retirement Plans
There are several retirement savings options designed for entrepreneurs in Houston, TX, each offering its own benefits and trade-offs. A financial advisor can help you learn about the benefits and drawbacks of each choice and choose the one most suitable for your needs. In most cases, your self-employed retirement plan options in Houston, TX include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are financial tools for retirement that offer specific tax advantages. In a standard IRA, the money you contribute is often tax-deductible, and returns grow free of current taxes, but withdrawals in retirement are taxed as income. In contrast, Roth IRA contributions from post-tax earnings, but qualified withdrawals in retirement, including earnings, are not taxed. In both types of accounts, withdrawals come without penalties if you are at least 59½.
Eligibility: Unlike plans linked to your job, traditional and Roth IRAs are accessible for individuals with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs are capped at $7,000, or $8,000 for those aged 50+.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs offers a way to save for retirement that enables self-employed individuals to contribute a percentage of their net earnings. Contributions are strictly employer contributions an employer, so, as a sole proprietor, you (the employee) cannot make additional contributions beyond the 25% you (the employer) have designated. If you have employees, you must contribute the same amount for them as you do for yourself. You may choose to contribute a flat-dollar amount or a percentage of wages to employee accounts. A SEP IRA may be ideal for entrepreneurs facing periods of inconsistent earnings. In contrast to some alternatives, SEP IRAs are free of the high fees associated with starting or maintaining other plans.
SEPs work like standard IRAs, where you contribute pre-tax dollars and money withdrawn is subject to income tax.
Eligibility: Both employers and self-employed individuals can open a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA must not exceed:
- 25% of compensation, or
- $70,000 for 2025
If you’re self-employed, the allowable contribution is based on a special calculation.
Solo 401(k)
Plan Overview: The Solo 401(k), also called an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed meant for businesses with no employees or where the only employee is a spouse. Solo 401(k)s operate much like traditional employer-managed 401(k) plans, and let you make contributions as both an employee or an employer with pre-tax money. This provides more savings versus SEPs or IRAs; however, the increased savings potential often come with more limited investment options. Using a solo 401(k), you can make either traditional or Roth deferrals, which have the same tax benefits as their IRA contribution counterparts.
Eligibility: Only business owners and their spouses can set up and contribute to a solo 401(k).
Contribution Limits: As a self-employed individual with a solo 401(k) plan, you can make two types of contributions:
- Deferrals as an employee of up to 100% of your earned income from self-employment, subject to the annual contribution limit. For 2025, the limits will be $23,500, or $31,000 if you are 50 or older, or $34,750 for individuals aged 60-63 in 2025.
- Profit-sharing contributions (as an employer) must not surpass 25% of your adjusted self-employment income, which is your net profit minus half of your self-employment tax and the employee contributions you made.
Your combined contributions must not surpass $70,000, or $77,500 for those aged 50 and older (for 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans is a retirement option that guarantees a fixed, predetermined benefit to entrepreneurs upon retirement. In contrast to the plans discussed earlier, this plan is not influenced by market performance, but lets individuals clearly understand what they'll receive in retirement. This plan is ideal for wealthier entrepreneurs who want to save a significant sum for retirement and can commit to making larger deposits. Contributions offer tax-deferred growth, and withdrawals incur taxes as income during retirement.
Eligibility: Any self-employed individual running an owner-only business or with less than five employees may establish an individual defined benefit plan, but it's most commonly recommended for those over 50 who make $250,000 or more annually. In most cases, good candidates for defined benefit plans include:
- Partners or owners who aim to deposit more than $70,000 (or $77,500 for individuals 50 and older)
- Organizations that already put in 3-4% but are open to increasing contributions
- Businesses with proven consistent profit patterns
- Entrepreneurs over age 40 who desire to "catch up" or accelerate the retirement savings
Contribution Limits: The maximum allowable contribution requires calculation from an actuary using your earnings, age, and retirement objectives. Limits on contributions change annually.
The Importance of a Financial Advisor in Houston, TX for Your Self-Employed Retirement Plan
Partnering with an advisor in Houston, TX specialized in self-employed retirement plans can be an important asset for self-employed individuals. They have the expertise to help understand the intricacies of saving for retirement and design a personalized approach that reflects your aspirations. An expert in your area will assess where you stand financially, understand your risk tolerance, and guide you in choosing wisely about saving and investing for retirement. Included in what we do for you features:
- Assist in selecting a plan that best fits your needs and goals
- Tailor the plan to your needs even further
- Create a written plan that complies with IRS regulations
- Set up an asset trust plan
- Ensure you comprehend the plan's terms
- Review and modify your plan when necessary
- Deliver continuous support and financial insights throughout your retirement planning process
- Boost your retirement earnings by maximizing your social security benefits
Self-Employed Retirement Plans in Houston, TX: Correct Capital's Process
Houston, TX business owners who lack the time, interest, or knowledge to handle their own retirement planning on their own may end up overwhelmed by their choices. With Correct Capital, our Houston, TX financial advisors take on the majority of your retirement planning for you, to help make meeting your future savings targets as hassle-free as possible for you. We can help you get set up your self-employed retirement plan in a quick, four-step process:
- Schedule a Call: It only takes 20 minutes, a member of our advisor team can help understand if we're a good fit for you and your business. This initial call allows us to learn about your needs with no obligation or major time investment on your part.
- Gather Information: If we both decide to move forward, we'll request information, including whether you have employees, your existing financial picture, and your long-term savings targets. This allows us to put together a personalized strategy designed just for you.
- Review Your Plan: After we put together a plan from the information you provide, we'll schedule a meeting and discuss your plan step by step to ensure you understand it and explain its fit to your circumstances.
- Implementation and Monitoring: When we finalize on your plan, we'll set everything up so you can start saving. As time goes on, we'll have regular meetings and monitor your plan to make sure it remains aligned with your goals.
Our Houston, TX financial advisors and retirement plan consultants are fiduciary advisors, which means they are legally and ethically bound to prioritize your needs above all else.
Other financial advisory services we offer in Houston, TX include:
- 401(k) Audit
- High-Net-Worth Wealth Management
- Retirement Planner
- Financial Planning
- Retirement Plan Consultants
- Fiduciary Financial Advisor
Call Correct Capital for Your Self-Employed Retirement Plan in Houston, TX
You don't see your business as "just a business", and your Houston, TX financial advisors need to offer more than just good financial guidance. At Correct Capital, we make it a priority to understand our clients and their businesses to create customized self-employed retirement plans. All our clients in Houston, TX benefit from our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To get started on your self-employment retirement plan, call Correct Capital today at 877-930-401k or contact us online.
